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Tuesday, September 25, 2007

Groom the goal scorers

The deal frenzy made possible by years of easy credit has come to an end. Private equity barons can put away their slide-rules and forget about that daring bid for Microsoft – for the time being, at least. We will have to wait a bit longer for the next deal of the century. Until then, I’m afraid, this can only mean one thing: it is back to boring old management. The new (if merely temporary) owners of all those recently acquired assets are going to have to get their heads down and show us how clever they really are. Now we will find out who has the ability to raise the performance of their businesses, to cut costs without doing more harm than good, and to run their companies effectively. Guess what? It is not going to be easy. Business leaders will take a hard look at their organisations and wonder whether they have the necessary managerial “talent” – the other popular phrase is “bench strength” – in place to meet this challenge. If you thought you had already heard enough for one lifetime about “talent pipelines” and leadership development, you had better brace yourself for more. The publishing arm of Harvard Business School has just completed a research study to discover the top executive-level concerns facing global companies. Talent management came out as agenda item number one. This points us towards one of the untold stories about vibrant economic growth. You might think that a buoyant economy and dynamic emerging markets must be good news for business. They are – but only if you have the people in place to make the most of them. Being sent halfway round the world to run the Chinese operation is hardly an easy assignment. It takes a rare combination of skills and experience (and the right attitude) to work successfully in an unfamiliar and fast-changing environment. Equally, any newly minted MBA can cut costs. The important question is, who can build on existing revenue streams and find new ones at the same time? Leaders are made, not born. This means that if you have not already been taking steps to develop managerial talent in your business then you may be a bit late. You will certainly have fallen behind those organisations – talent gurus mention General Electric, Procter & Gamble and Nokia in this context – who have been working at this for some time. (The lucky ones among you might be able to go out into the market, like a football manager, and buy the talent you need. But this is an expensive, inefficient and unreliable option. Better to grow your own.) Presuming that you are not too late, what can you do to help talent flourish within your walls? Naturally – this being management-land – you have a choice of metaphors to go for. You can try to build a “talent factory”, or you could establish a “talent marketplace”. In the June edition of the Harvard Business Review, Doug Ready and Jay Conger wrote in some detail about the nature of a successful talent factory. The companies they looked at – P&G and the banking group HSBC – are able, in the authors’ opinion, to combine rigorous management development processes (“functionality”) with “vitality” – an “emotional commitment by management that is reflected in daily actions”. At P&G, for example, when a vacancy arose for a rising star to run a joint venture in Saudi Arabia, the requirements for the new role were very specific. The manager needed to have emerging-markets experience but also needed to understand the detergents business and be prepared to relocate at short notice. OK, so P&G is big, and it should have been able to find someone. But five suitable candidates were immediately identified on the company’s global “talent profile” database, and the new manager was in place just three months after the search began. Profs Ready and Conger pose some simple but revealing questions about how seriously companies take the issue of talent development. They challenge business leaders directly. Do you know what skills you will need to meet your growth targets? Do you know how to spot high potential future leaders, and if so, do you build individual development plans for them? And so on. They have 10 such questions in total. There is no ducking this professorial inquisition. Prof Ready says that the issue of “high potentials” has to be handled sensitively: “Remember that as well as ‘High Pos’ you can also get ‘Po-Pos’ – Passed Over and Pissed Off.”Even more radical than the factory concept is the “talent marketplace” described by McKinsey’s Lowell Bryan and Claudia Joyce in their recent book Mobilizing Minds. “Use market mechanisms to match the self-interest of employees seeking the best job opportunities with the self-interest of managers looking to fill their job opportunities with the best available talent,” they write. HR managers as “talent market-makers”? It makes a change from “strategic partner” at any rate. There is no substitute for talent. As BBC TV’s football pundit Alan Hansen likes to say: “Who do you see when you look round your dressing-room before the start of the match? Does your team have a chance?” Well, does it? - (FT, 24 Sep 07)